Legal / Financial Advisors

Full Time Custodial 
Care for 95k Less
When your clients need long term, non-medical custodial care, they only have 2 options. They can relocate to a care facility or care can be brought into their home. Given the option, 90% of seniors choose to receive the care in their own homes* and those same seniors surveyed feared being relocated to a care facility more then they feared death* , so let’s look at helping them stay home, shall we?

Up until 2015, getting full time custodial care at home through a homecare agency was relatively easy and cost about the same as a care facility. The agency would hire and place a live-in caregiver in the family’s home to work 16 hrs. each day helping out with the care recipients ADLs and IADLs, then sleep in the home (unpaid) in case there was an emergency or even help with a middle of the night bathroom visit for a fall risk patient. The family got one on one help at home from the time that they awoke till bedtime. The agency would send their RN or social worker to the home every 45-60 days depending on their states laws, and the RN would do a care assessment to make sure that all was going well. It was a beautiful thing.

Then came a major change to a 1938 labor law called the FLSA. The change effected “3rd party employers” of domestic live-ins. Under the original law, domestic live-ins were exempt from the nations over time laws, and were not entitled to pay for their sleep shifts. Under the new law, home care agencies had to pay their live-in caregivers both overtime pay AND for their entire sleep-shift if they didn’t get 5 continuous hours of sleep. BABOOM!

Under the old law, a live-in could be paid as little as $116 a day, regardless of how many times they were awoken during their sleep shift. Now, that same live-in would have to be paid $240 a day (based on $7.25 min wage). Add onto that, payroll taxes and we are up to $270 a day. Agencies were charging families $200-$300 a day when they were paying the live-in $116! Imagine what they would have to charge now to maintain their profit margins. The FLSA law changes were the death of live-in care delivered by an agency.

Once live-in care was off the table, it only left one option to keep seniors at home who needed full time custodial care. Those same agencies quickly realized that they only way to maintain profits of custodial care clients was to cut down on the crushing amount of overtime that the new law mandated. The only way to do this was to divide up and piecemeal out the hours to 4-6 individual caregivers all working hourly shifts instead of one doing live-in. Charging at their normal agency hourly rates, they could maintain their profit margins, and make a killing in increased revenue.

According to Genworths 2017 “Cost of Care”*** survey the national average for homecare is $21.50 per hour. That puts an agency's 24 hr. rate at $516 per day. If you do the math, that’s a staggering $188,340 per year.

What's sad is that because of the FLSA law changes, full time custodial care patients are being forced to go into care facilities that they don’t want to go into. They have no choice…or do they?

We can help keep that custodial care client home as they wish, and help them do it for less than the cost of a care facility.

How this is possible, is that when Congress made the changes to the FLSA law, they decided to keep the original over time exemptions for families who privately hire their own workers.

"(2) the exemptions for companionship services and live-in domestic service employees may only be claimed by the individual, family, or household using the services rather than third party employers such as home health care agencies" ****

Let’s look at some numbers.
  • Grandma Joan’s service fee for screening and vetting live-in custodial care candidates for the family to choose from.  $3,250
  • Live-in employees’ wages based on $12.50 hr working 16 hrs each day, 7 days each week. $73,000 yr. This equals a pay rate of $200 per day which is about average for a live-in.
  • All state and federal payroll taxes and an FLSA compliant payroll service that the family hires to pay the live in. $8,900 yr
  • Annual policy of workers comp insurance for liability protection $1,200 yr (required in 17 states, $ vary by state between $250-1,500 per )
  • Care Manager that the family hires to oversee and monitor the care recipient at home. $6,000 yr (based on 4-5 hrs work each month at a rate of $100-$125 hr)

The total is $92,350. That is less than HALF of the $188,340 that  a home care agency charges for full time custodial care (delivered at home via 24 hr shiftwork). It is also $5,000 less than the national average cost of a care facility (97k).

In summary, Grandma Joans and you can be important parts of helping clients obtain full time custodial care in their own home at 95k less than the only alternative.

* “Aging in Place in America” Study Commissioned by Clarity® and The EAR Foundation.         
        www.clarityproducts.com/research.
** “The Genworth Cost of Care Survey” 2017 : https://www.genworth.com/about-us/industry-expertise/cost-of-care.html
***  Fair Labor Standards Act. 2015.  https://www.dol.gov/whd/homecare/faq.htm

Notes: CA and MA have separate "Domestic Workers Bill of Rights" which dictate stricter laws for private hire domestic workers than any other state. In CA, the live-in can’t be required to be on call during their unpaid sleep shift.  ME, NY, NJ, MN, and MD have labor laws that OT must be paid to domestic workers, but unpaid sleep shifts are permitted. Generally, annual rates will be 10k+ more in these states but still 70-80k less than 24hr homecare.

Disclaimer: This webpage contains general information about legal matters.  The information is not advice, and should not be treated as such. The legal information on this website is provided “as is” without any representations or warranties, express or implied.  Grandma Joans LLC makes no representations or warranties in relation to the legal information on this website. 

Want to discuss this in more detail or see if we can partner to help one of your clients age in place at home? Give us a call Mon-Sat 9am-6pm EST at 888.250.2631 x700